DOW JONES NEWSWIRES
Advanced Medical Optics Inc. (EYE) swung to a fourth-quarter profit on boosted margins and higher revenue for cataract procedures, though laser correction slumped on an industrywide drop in demand for such services.
Abbott Laboratories (ABT) agreed last month to acquire Advanced Medical for about $1.36 billion, a deal that launches Abbott into the eye-health market at a discount but also exposes it to a business that has been walloped during the recession.
Most sought is Advanced Medical's cataract business. Abbott noted last month that 60% of people over 60 have the eye problem and that the number of people with it is expected to increase nearly 50% in the next decade. The segment is half of Advanced Medical's revenue, and 70% of its cataract sales are overseas.
The company, which also makes equipment for Lasik vision-correction surgery, posted net income of $25.1 million, or 40 cents a share, compared with a year-earlier net loss of $12.3 million, or 20 cents a share. The latest quarter included a net gain of 23 cents a share related to the early retirement of debt, while the previous year included 17 cents a share in acquisition-related charges and hedging losses.
Revenue decreased 6.4% to $285.2 million.
Analysts surveyed by Thomson Reuters expected earnings of 14 cents a share on revenue of $283 million.
Gross margin dipped to 58.2% from 58.5%.
Cataract business sales rose 3.8% and eye-care sales rose 8.3%, driven by the addition of artificial tears to the company's product line.
However, refractive sales fell 25% as strength in Japan was more than offset by woes in other parts of the world as declining consumer spending crimps demand for elective vision-correction procedures. Advanced Medical said its share of the U.S. Lasik market was 62%, unchanged from the prior quarter.
Abbott will pay $22 a share for Advanced Medical, a huge premium to the company's stock the day before the deal was announced but a level equal to where the stock was trading four months before. The deal is set to close later this quarter. The stock lost nearly 90% of its value in September and October, but has more than tripled so far this year on the Abbott bid.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; kerry.grace@dowjones.com